2of4The exterior fire sprinkler system is tested by Frontline Wildfire Defense Systems is tested at the Cohen residence, Wednesday August 7, 2019, at their home in Mill Valley, Ca. Homeowners in fire-prone areas are taking extra precations for insurance and to protect their homes.Photo: Lacy Atkins / The Chronicle

3of4Tom and Kristi Cohen watch as an exterior sprinkler system is tested at their Mill Valley home. Kristi Cohen lost a relative in a house fire.Photo: Lacy Atkins / The Chronicle

4of4Kristi Denton Cohen and Tom Cohen watch as the installer tests their exterior fire sprinkler system at their Mill Valley home.Photo: Photos by Lacy Atkins / The Chronicle

In response to the rising cost and risk of California wildfires, some insurance companies are requiring property owners in high-hazard areas to perform extensive, often expensive, mitigation work to keep their policies.

In some cases, they are demanding more than what local and state fire departments recommend.

On May 14, Katharine Menzies of Mill Valley got a letter from The Hartford threatening her with “cancellation or nonrenewal” if she didn’t “completely remove all trees and bushes within five (feet) of the front sides, or rear of the dwelling,” remove plants touching her home; cut annual grasses to a maximum of 4 inches; remove all dead or dry vegetation within 30 feet of all structures and remove anything stored underneath decks or porches.

Menzies said she completed the work and sent photos to prove it, but on June 14 received a letter from Hartford saying the work was incomplete and “does not meet our qualifications to continue coverage.” It said it would consider “any proof of clearance provided” up until the nonrenewal date.

Menzies called the Mill Valley Fire Department to inspect her property. In a letter dated July 11, it said her property complied with “all vegetation management ordinances” for 2019 and called it a “model for defensible space best practices for other homes to use.”

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Mill Valley Fire Chief Tom Welch said the company’s demands are “beyond what we would recommend, but within reasonableness.”

Mill Valley is on the verge of approving one of the most aggressive vegetation-management ordinances in the state. Within a few years, it would require property owners in the wildland-urban interface, which covers about 75% of the city, to completely remove 10 types of trees and plants and create a 3-foot noncombustible zone around their house. A bill in the Legislature, AB1516, would require property owners in Cal Fire’s highest-risk zones to create a 5-foot noncombustible zone around their structures.

Many insurance companies aren’t waiting for such measures to take effect. They’re not selling or renewing some policies in high-hazard zones, or requiring mitigation to maintain them.

Over the past two years, the California Department of Insurance has seen a surge in complaints about renewal issues (mostly nonrenewals) from people in ZIP codes within counties designated by Cal Fire as having the highest wildfire risk.

Last year, it got 276 complaints about renewal issues from high-risk areas, almost double the number — 143 — it got in 2016. From all other parts of the state, it got only 102 renewal complaints last year, up barely from 96 in 2016.

“Cancellations occur far more frequently than understood,” Welch said. “Recently, I’ve heard stories where the insurance companies compel residents to complete work relative to home hardening and vegetation management at significant expense to the resident.”

For help

When his Fire Department hears from a homeowner threatened with nonrenewal, “we go to the house, we evaluate the property against current rules, prescribe work, (and when it’s done) we write a letter on their behalf,” Welch said. “We’re batting about .500,” meaning that half of homeowners retain their coverage.

Skip and Felicia Rankin, who live outside Nevada City on 5 acres in the Tahoe National Forest, got a letter similar to Menzies’ from The Hartford dated June 3, after an inspector had visited their home about a month earlier. The Rankins clear their property annually, but this year, because of the late snow, they were only half done when the inspector came by.

The letter required them to do most of the work it required of Menzies, plus move firewood stacks at least 30 feet from the home and install fine metal mesh on attic and eaves vents to screen out embers. It also required them to trim or remove trees so that between 30 and 60 feet of the house, there would be at least 12 feet of space between canopy tops. Between 60 and 100 feet of the home, they’d need at least 6 feet between treetop branches.

It demanded photos proving the work had been done by July 4, or their policy set to expire Aug. 30 would not be renewed.

“My husband is a disabled Vietnam vet. We put out a call for help,” Felicia Rankin said. On June 15, “our local VFW sent 12 guys over.” They helped do all of the work except tree removal and trimming.

On June 20, the Rankins had Cal Fire do a “defensible space inspection” and their property passed with “no violations observed,” according to the report.

Felicia sent the report, along with photos of the work completed, to Hartford. When she didn’t hear back, she called and was told that if she had a signed contract for the tree work by a certain date, it would extend her policy, she said.

She got two quotes from tree companies. One was for $14,000, which excluded a permit and haul-away. The other was for $30,000 all inclusive. “We can’t afford it,” Rankin said. Thinking they might have to sell the home, the couple made an appointment with a real estate agent for Thursday.

On Wednesday, however, they got a renewal in the mail, extending their policy through Aug. 30, 2020.

The Hartford has “identified a small number of customers in places with significant vulnerability to wildfires and have appropriately tied our ability to provide ongoing insurance coverage to the prudent removal of brush and other risks, based on Cal Fire and Firewise standards,” a spokesman said in an email. (Firewise is a program of the National Fire Protection Association that seeks to help residents reduce wildfire risks.) “Generally speaking, we will work with a homeowner to renew their policy if a municipal fire authority confirms that the property complies with local ordinances.”

A state Insurance Department spokesman said in an email that current law does not prohibit insurance companies from requiring homeowners to do fire-mitigation work if it falls within their existing guidelines and those guidelines “are objective and relate to the risk of future loss.”

Homeowners who can’t get insurance because of fire risk from mainstream companies, those regulated by the Insurance Department, have two options. They can go with a surplus lines carrier, such as Lloyd’s of London, which are much less regulated by the state and don’t have to get their rates approved. Last year, surplus lines carriers sold 60% more policies in California than they did in 2016, according to their state trade association. In the first five months of this year, they sold 75% more.

The other option is the California Fair Plan, an association of California’s licensed insurance companies that sells policies on their behalf to people who have been rejected multiple times through no fault of their own.

Fair Plan policies only cover fire; homeowners have to buy a “wraparound” policy from another company to cover water, wind, theft and other perils, plus liability. The Fair Plan got Insurance Department approval to raise rates 20% on average April 1, but up to 69% in the highest-risk cases.

Matt Timberlake and his wife had Travelers insurance on their Mill Valley home for 15 years. When they rented it out temporarily to friends, they switched to a Travelers landlord policy and got a Travelers renters policy on a home they were leasing in San Francisco. When they moved back to Mill Valley in June, however, Travelers wouldn’t switch them back to a homeowners policy. Their insurance agent “couldn’t find anyone to pick us up, not a single vendor. Now we’re with the Fair Plan” and a wraparound policy, Timberlake said. The two policies combined, cost several times more than they had been paying.

Kristi Denton Cohen and Tom Cohen also had to resort to the Fair Plan when Lloyd’s of London refused to renew the policy on their Alpine Meadows ski cabin after it expired July 26. Before, they were paying about $2,300 a year. Now, they’re paying $3,000 for the Fair Plan and got a quote for $2,000 on a wraparound policy.

They still have coverage on their primary home in Mill Valley from Travelers. In fact, they recently got a “Wildfire Defense Services endorsement.”

Travelers added this endorsement to all California homeowner and landlord policies in June, at no cost to customers. Travelers has contracted with a company that will determine whether a customer’s home is in imminent danger and, if so, access the property to provide free loss-prevention services such as clearing brush, taping vents and applying fire retardant.

Like many companies, Travelers has told investors that it is restricting its “new business underwriting appetite” in California. It’s also instilling new underwriting procedures, such as “further inspections around defensible space.”

The Cohens also took the extraordinary step this week of installing exterior fire sprinklers from Frontline Wildfire Defense Systems. When a fire is approaching, the sprinklers intermittently spray water plus a foam solution on the structure and a 50-foot perimeter to prevent embers from spreading. It can be activated manually or remotely from a computer or smartphone app.

Travelers does not offer a discount for wildfire-mitigation measures, but the Cohens don’t care. “I lost my grandmother in a house fire. I have always been super sensitive to the issue,” Kristi Cohen said.

Kathleen Pender writes the Net Worth column in The San Francisco Chronicle. She explains how the big business and economic news of the day affect a household's net worth. She covers saving, investing, debt, taxes, housing, mortgages, retirement plans, employment and unemployment with a focus on issues specific to California and the Bay Area.

When it comes to big financial decisions, she believes that the simplest answer is almost always the best and that people would stay out of money trouble if they didn't get involved in things they can't understand. Pender welcomes questions from readers and frequently answers them in her column.

She majored in business journalism at the University of Missouri-Columbia and was a Knight-Bagehot fellow in business journalism at Columbia University.